Bitcoin is falling ahead of the FOMC and CPI data release today, and the results are expected to shape the short to medium-term Bitcoin price analysis prediction.
Crypto prices don’t rise (or fall) in perpetuity. Price action is cyclic, and it is evident from the chart.
There are euphoric booms and painful bursts, both creating opportunities. After the expansion in Q1 2024, momentum faded in late March before prices tumbled in April.
This continued until mid-May when Bitcoin crashed to as low as $56,500 before expanding, breaking above $70,000 but failing to break $72,000. Bears are once more back in the equation.
Bitcoin Price Slips, Millions Liquidated In Past 24-Hours
At press time, Bitcoin is down roughly -10% from all-time highs, dropping nearly -5% in the last 24 hours.
Considering its weight and role in crypto, the contraction has had a cascading effect, dragging altcoins down.
(BTCUSDT)
Of note is that the decline of BTC prices has triggered a wave of liquidation across perpetual markets in Binance and OKX.
Coinglass said over $189 million of BTC leveraged positions from more than 83,000 traders were closed. A big chunk, $147 million, is those betting prices to continue rising.
There could be more liquidations today, especially if prices unexpectedly rise, going against the current major price trend.
However, traders and investors are not looking at technical candlestick arrangements today; they are focusing on two key market events in the United States.
Market Eyes On Inflation Data And Federal Reserve
First, the Consumer Price Index (CPI) data will hit the market in the early New York session before Jerome Powell and the Federal Open Market Committee (FOMC) team decide whether interest rates will remain the same, slashed, (or even hiked (unlikely).
Crucially, the CPI data will update the market on whether the Federal Reserve’s fight against inflation is successful or not.
Economists expect inflation year-to-date to steady at 3.4% while dropping by 0.1% over the last month from April.
Meanwhile, after two days of meetings, Powell will also hold a press conference to announce updates to American fiscal policy.
Rates will be key, but investors will look forward to Powell’s speech 30 minutes later.
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Will Bitcoin Price Rise Or Fall?
Bitcoin will likely crash if there is a bad combination of higher-than-expected inflation and the Fed saying it plans to keep rates steady or even raise them like they did in 2021 through to early 2022.
Overall, financial experts widely anticipate the Fed will maintain current interest rates.
As it is, the interest rate is at a 23-year high of 5.25% to 5.5%, primarily because of the high inflation above the benchmark target of 2%.
Many economists still believe the Fed will cut rates in 2024 despite the anticipated hold on rates today.
The expected crypto boom following this cut won’t be until the September meeting.
After that, analysts expect another last cut before the year’s close. The problem is that the pace is highly data-driven, depending on where inflation is.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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